Annual Filings (Certification Of E-Forms And MGT-8) - ICSI

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Annual Filings(Certification of e-Formsand MGT-8)By CS D.V.M Gopal

Topic to discussPractical aspects on certification of: Form AOC-4 Form MGT-8 Form MGT-7

“There are three qualities that makesomeone a true professional. These are theability to work unsupervised, the abilityto certify the completion of a job or taskand, finally, the ability to behave withintegrity at all times.― Subroto Bagchi

Why annual forms is imp to file?DIRECTORSDisqualification under Sec164(2), vacation under Sec 167PROFESSIONALSPenal provisions inAct for wrongcertificationAnnualFilingsCOMPANYExemptions by Pvt Co.,Govt Co. and Sec 8 Co.Ground to wind-up byTribunal

Point to Remember - for certification Due consideration of provisions of the Act Check thoroughly the correctness Exercise due care, diligence and skill Obtain Letter of engagement/ BR - authorization Maintain copy of document verified Witness the authorised signatory of form signing it Ensure all attachments are duly attached and are legiblePenal actions for wrong certification Company Secretaries Act, 1980 – Professional and other misconduct Liable under Sec 447, 448 & 449 w.r.t. for Fraud, False statement and Falseevidence & Applicable Section

1Form AOC4

Filing financial statement, etc – FormAOC-4Section 137(1), every Co. to file with the ROC a copy ofits FS, including CFS, if any, along with all otherdocument required under the ActForm prescribed – Form AOC-4Categorization of Companies Companies not requiring consolidation Companies requiring consolidation Companies for which filing in XBRL is applicable

Role of Professional in Certification Is he doing audit of the Financials again or just checkingwhether the AOC-4 figures are matching with the auditedfinancials? If Directors have not explained in their directors report forqualifications, observations, remarks made by the auditors? If Directors Report is not prepared as per Sec 134? If you find non-compliances under the CA 2013, whilecertifying AOC-4?8

Companies not requiring consolidationCompanies filing inXBRLForm AOC-4 with the ROC within 30 of AGM or last date for File Form AOC-4 XBRL, with theAGMROC within 30 of AGM or last datefor AGMCompanies requiring consolidationFile Form AOC-4 and Form AOC-4 CFS, with the ROCwithin 30 of AGM or last date for AGMApplicability:Consolidation is required for companies havingSubsidiary(s), Associate Company and Joint ventureApplicability for XBRL: Co. listed on any SE and itsIndian Subsidiary(s) Co. with paid up capital of Rs. 5Cr or Co. with turnover of Rs. 5 Cr or Exemption: Intermediate Subsidiary Co., Subject to. (Rule 6) Co.’s having only Subsidiaries Inc outside India, for theFY II1st April, 2014, ----- Is it still continuing (4th provisoRule 6)Exemption to Co. inbanking,insurance, power sector, NBFCand HFC

Attachments to AOC-4 Copy of financial statements duly authenticated as per section 134 (includingBoard’s report, auditors’ report and other documents) Statement of subsidiaries as per section 129 – Form AOC-1 Statement of the fact and reasons for not adopting Financial statements in theannual general meeting (AGM) Statement of the fact and reasons for not holding the AGM Approval letter of extension of financial year or AGM Supplementary or test audit report under section 143 Company CSR policy as per sub-section (4) of section 135 Details of other entity(s) Details of salient features and justification for entering into contracts/Arrangements/ transactions with related parties as per Sub-section (1) ofsection 188 - Form AOC-2 Details of comments of CAG of India Secretarial Audit Report Directors’ report as per sub-section (3) of section 134 Details of remaining CSR activities Optional attachment(s), if any

Practical aspects Companies rounding off the amounts in the FS – In AOC-4 III. *Financial parameters – Balance sheet items in list 1 to 41 (warrant,Inter-corporate deposits , etc) - As on financial year end date Are SD copies permitted?/ only signed AGM notice attachment? Director’s attendance - mandatory as per SS Books of Accounts – maintenance Secured borrowings Limit on fields in AOC-4 – persons signing What if Co. is sub Co. of Foreign Co., forHold Co. In case of qualifications, reservations oradverse remarks in AR, no comment in BR –stand on certification Is correctness of attachments also requiredto be certified Do the PCS need to check Notice, Minutes,attendance, etc

Business / Product CodesFormMGT-7PrincipleBusinessactivity ofCompanycodes areprovided in theInstruction Kit ofForm MGT-9PrincipleBusinessactivity ofCompanyNIC Code –2004/2008?As per ICSI Draft GNon AR – NIC 2008Form AOC4PrincipleProducts orservices of theCompanyNPCS / ITC-HScode available onwww.mca.gov.in

DeclarationDeclarationFormAOC-4&Certificate–

Penal provisionsFailure to file Company - punishable with fine 1K every day duringdefault, upto 10 Lakhs MD & CFO– If no MD & CFO, authorised Director for filing If no authorised Director, all Director Imprisonment upto6 month or with fine 1 Lakh, upto 5 Lakhs, or bothCompounding of OffenceOffencecommittedu/sSection137iscompoundable only with the permission ofthe Special Court

IND AS IMPLEMENTATION STAGES Listed companies having net worth 500 croreCompanies having net worth 500 croreEffective 1st April, 2016 Companies with net worth 250 crore to 500 croreEffective 1st April, 2017 NBFC having net worth 500Banking companiesEffective 1st April, 2018 NBFC with net worth 250 crore to 500 croreEffective 1st April, 2019IND AS applicable on Parent, Subsidiary, Associate and JV15

2Form MGT8

Certificate by a Company Secretary inPracticeApplicability: listed companyMini SecretarialAuditForm MGT-8 Co. with paid-up share capital of Rs. 10 Cr or Submitted as anattachment to Annual Co. with turnover of Rs. 50 Cr or Return in Form MGTCertification on:7disclosure on facts correctly & adequately and that Co.has complied with all the provisions of CA, 2013 (Sec92(2))Format prescribed in Rules – MGT-8

MGT-8 - ContentsA. the Annual Return states the facts correctly and adequately (as at end of FY)B. during financial year Co. has complied with provisions of the Act & Rules madethere under in respect of:1status under the Act2maintenance of registers/records3filing of forms and returns as stated in the annual return, with ROC, RD, CG,NCLT, Court or other authorities within/beyond the prescribed time4calling/ convening/ holding BM or its committee Meeting, if any, and meetings ofmembers on due dates as stated in the annual return5closure of Register of Members / Security holders6advances/loans to its directors and/or persons or firms orcompanies referred in section 185

MGT-8 - Contents7contracts/arrangements with related parties as specified in section 1888issue / allotment / transfer / transmission / buy back of securities/ redemption ofpreference shares or debentures/ alteration or reduction of share capital/conversion of shares/ securities and issue of security certificates9keeping in abeyance the rights to dividend, rights shares and bonus sharespending registration of transfer of shares10declaration/ payment of dividend; transfer of unpaid/ unclaimed dividend/otheramountsto the IEPF as per section 12511signing of audited FS as per section 134 and Boards report is as per sub sections (3), (4) and (5) of section 13412constitution/ appointment/ re-appointments/ retirement/ filling up casualvacancies/disclosures of the Directors, Key Managerial Personnel and the remuneration paidto them;13appointment/ reappointment/ filling up casual vacancies of auditors as per section

MGT-8 - Contents14approvals required to be taken from the CG, NCLT, RD, ROC, Court or such otherauthorities under the provisions of the Act15acceptance/ renewal/ repayment of deposits16borrowings from its directors, members, public financial institutions, banks andothersand creation/ modification/ satisfaction of charges17loans and investments or guarantees given or providing of securities to otherbodiescorporate or persons falling under the provisions of section 186 of the Act18alteration of MOA and/ or AOA of the CompanyNote - The qualification, reservation or adverse remarks; if any, may be stated at the relevantplace(s).Attachments - Annexure to the Certificate

Practical aspectsScope of Certificate – Act / MGT-8Timing of MGT-8 & MGT-7Words “forms and returns as stated in annual return”2 different professionals for Signing and Certification - RecomFormat not clear- to state Not Applicable in appropriate casesWhere Secretarial Audit applicable to Co.

3Form MGT7

Questions before us? What is Annual Return? Why Annual Return to be filed? How it has to be filed? What all contents to be covered in it? Who has to file it? Who all to sign the Annual Return? What are the penal provisions of non-filing of Annual Return on time? Checks for certification?

Annual Return – snapshot ofCo.Section 92 - Every Co. to prepare Annual Return in FormMGT-7, must be filed with ROC within 60 daysWhy is it imp to file: Definition of “Promoter” Availing exemptions by Pvt Co., Govt Co. and Sec 8 Co- Amendment Copies of annual returns as prima facie evidence (Sec 95) Disqualification under Sec 164(2), vacation under Sec 167 Ground for petition under Sec 272, to wind-up by Tribunal Other penal provisions in Act

Other points. Format: Form MGT-7 Signing: director and the CS, or where there is no CS, by a PCS Place: Copy of Annual Return shall be kept at RO Preservation: shall be preserved for a period of 8 Years from filing Certification of AR: Listed Co. , Co. - PUC of Rs. 10Cr or , Co. – TO of Rs. 50 CrAttachments List of Shareholders/ debenture & MGT-8 (if any) Approval letter for extension of AGM (if any)Exemption - form Cert. OPC and Small Company shall be signed by CS, or If no CS, by a director

Penal provisionsFailure to file Company - punishable with fine 50 K, upto 5 Lakhs Officer in default – Imprisonment upto 6 month orwith fine 50 K, upto 5 Lakhs, or bothCertification not in conformity PCS- punishable with fine 50 K, upto 5 LakhsCompounding of OffenceOffence committed u/s 92 is compoundableonly with the permission of the SpecialCourt

Practical aspects What is the difference betweenSigning & Certification? Promoter-Who is the Promoter? GM attendance -- % include Pref. Shares? % of Shares held by directors – Incl. Pref.Shares? Hold Co. – Only regd under CA Hold/ Sub / JV/ Asso Co. – % include Pref.Shares? Sub Co. & JV – even Body Corp Net-worth Calculation – P&L Balance Asso Co. – Only regd under CA Count for person holding Eq. and Pref. Indebtedness calculation & if 2 or types of Debentures Cessation for Disqualified Directors? Share capital update on MCA Current maturities included inCurrent Liabilities – Is it a debt? Declaration in Form for Compliance with Act,for person certifying form Remuneration of CS/CFO/CEO – not KMP Committee ?

Limits for PCS as perICSI CERTIFY Annual Return pursuant to Section 92(2)(MGT-8) - not more than 80 companies for each of thefinancial year SIGN Annual Return pursuant to Section 92(1)(MGT-7)– No Limit

THE COMPANIES BILL, 2017 Proposed to be deleted Indebtnessdisclosure of name, address , counties of incorporation, registration of FIIs CG may prescribe abridged form of AR for OPC, small companies Annual Return on website – Disclosure of weblink in Boards Report, if any29

Management Representation Letter Suggested asGuidance NoteperICSI May be signed by CompanySecretary/ Managing Director/Senior Management Adequate enquiries shouldbe made and mere gettingcertificationfrommanagement may defeat thepurpose of the audit.30

Legality of Management Representation31 Obtaining Management Representation Letter is suggested by ICSI Cover the points of which direct verification is not possible The Auditor can use this letter of representation as part of his audit evidence. – ICSI Subject to adequate verification in respect of all matters is carried our effectively. Only obtaining Certification from Management may not serve the purpose of Audit anddetailed verification shall be carried out. However, in Satyam Scam the representation certified by Company and presented byStatutory Auditor of the Company was questioned. Thus a detailed verification of all aspects & matters shall be carried out instead ofmere relying on the Management Representation.

COMPLIANCE – THUMB RULEWHEN IN DOUBT, DISCLOSE IT.32

THANKS!Any questions?You can find me atCS DVM Gopal098491 sociates.in

Form MGT-8 Certification on: disclosure on facts correctly & adequately and that Co. has complied with all the provisions of CA, 2013 (Sec 92(2)) Format prescribed in Rules -MGT-8 Submitted as an attachment to Annual Return in Form MGT-7 Mini Secretarial Audit. MGT-8 - Contents

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